Cycle Trading

We discussed oil here back on 9/27.

(Above is the chart reprinted from 9/27)

We observed that the 40 level is a support level that stretched back to the early 90’s. Which coincided with oil being in its timing band for a 3 year cycle low.

(Above is the chart reprinted from 9/27)

We also observed that oil was crawling along the 50 day MA and forming a triangle consolidation pattern.

Today oil finally broke out.

After consolidating for over a month oil broke above the declining trend line in a clear and convincing manner. Oil also closed convincingly above the upper daily cycle band, which signals that oil is in a new daily uptrend. Since oil’s daily cycle can stretch to 50 days there is plenty of time for oil to make a break above the 200 MA before declining into its daily cycle low. At which time we will be watching to see if that daily cycle low will remain above the lower daily cycle band, which would then confirm the new daily uptrend.